Online Only: A Tale of Two Processors

A pair of small core processors have gotten together in a re-selling deal that brings together companies with striking similarities and one key difference.

R.C. Olmstead Inc. of Dublin, Ohio, will now be representing the CAMS-ii core processing system from Commercial Business Systems of Goldsboro, N.C.

CBS won’t be returning the favor but will work with R.C. Olmstead in supporting new and existing clients who opt for the more-updated CBS platform, the companies said.

The suburban Columbus company also will be continuing to support its own platform now in place at about 80 Midwest credit unions, primarily in the Buckeye State.

CBS, meanwhile, has about 65 credit unions using its platform, centered in the Carolinas and Southeast. Each company is about 30 years old, has 25 employees and serves small credit unions. Many are in the $5 million to $7 million range with R.C. Olmstead’s largest at more than $300 million and CBS with clients in the $140 million to $150 million range at its top end.

An industry mantra today is that small credit unions need the latest product offerings to compete, and that’s what CBS brings to the table, according to the two company presidents: Stephen Kambeitz at R.C. Olmstead and Tony Phillips at CBS.

Rather than extensively remaking its core system or creating more interfaces for add-ons, R.C. Olmstead will offer a CBS platform the companies said includes, among other things, text banking, remote deposit for homes and businesses and an interface that works well with iPads, all in a browser-based environment and development environment that allows speed to market with new products.

And it will offer a new market area for CBS, which Phillips said found itself in a similar situation several years ago.

“We’ve been where R.C. Olmstead is now from a product standpoint. We reached that crossroads where we had to either fight the marketplace with our legacy products or build the features and functionality into a new product that had the sexiness that people were asking for,” the CBS president said. “So we built that into what’s evolved into our Cam-ii product.”

As for R.C. Olmstead, Kambeitz said its legacy platform still works well for its clients and is not being sunsetted. But, he said, a shrinking marketplace helped make the decision to partner with “someone who kind of mimicked what we did but had a new product, and that’s how we found CBS.”

Now serving about 80 credit unions, R.C. Olmstead at one point had more than 130 clients on its core processing system, a number that has dwindled sharply in the past few years primarily because of mergers of healthy credit unions, Kambeitz said.

“We’re a shrinking industry and that’s not just in Ohio. It’s always sad to lose a client through mergers that way, and it became time for us to look at ourselves and at our industry and make a decision while things were still going OK,” he said.

“We would have survived without this but it gives us a big plus and an opportunity for future growth,” Kambeitz said. “When you look at 80 clients, that looks like a lot now but what will that be in the future? And will even that number be enough? Between the two of us, we have more than 130 clients, so we’re back to that number again. At the end of the day, that number makes us feel more comfortable.”

Phillips said the deal also is a good fit for his North Carolina-based operation.

“We saw this as a golden opportunity from another comparable, reputable company to take our Cams-ii product and put it in a marketplace that we wouldn’t normally aggressively go after,” Phillips said.

Unlike many other small core processors who sold their platforms to large operations, “we also saw this opportunity with R.C. Olmstead as an opportunity to remain independent. We hone pretty close to the idea that we want to keep our product in the marketplace and we didn’t want to be confined to just one geographical area,” Phillips said.

Kambeitz added, “Our owner, Bob Olmstead, also has had people try to buy his company for 30 years but he never had an interest in selling. We talked about a lot of things, but we decided to go with the best option for keeping us independent. That’s important to Bob and our employees and our credit union clients.”

And both agreed that they’re better positioned now to compete with their much larger counterparts, the Fiservs and Open Solutions and Symitars of the credit union world.

“It really just continues something we’ve seen over the years, especially with the big boys,” Kambeitz said. “We already had a decent product and decent pricing structure and now with the Cams-ii product, we have the feature set and technology to do fairly well against anyone we compete against.”

They also are confident about the credit union market despite consolidation.

“We feel real bullish on the credit union industry,” Kambeitz said. “The industry has been very good to us and Bob (Olmstead) feels very thankful to them and to what it’s afforded him and this company to do. That’s why he feels the way he does about not selling out.”

Phillips added, “We feel somewhat the same way and see the strong need for companies such as ourselves to be in this marketplace. It needs companies like us to provide viable alternatives to credit unions.”